Oil prices settle lower on dollar strength, ongoing supply surplus concerns
Investing.com -- Oil prices settled lower Tuesday, as a stronger dollar and fears about supply outstripping demand remain front and center, offsetting a potential supply risk from ongoing tensions in the Middle East.
By 14:30 ET (19.30 GMT), the U.S. crude futures settled 1% lower at $72.32 a barrel and the Brent contract fell 1.1% to $77.20 a barrel.
Fears of a potential escalation in the Israel-Hamas conflict came back into play after the U.S. held Iran responsible for an attack on U.S. vessels in the Red Sea by Houthi forces. But traders remained wary of pricing too high a risk premium into oil over the conflict, given that it so far had minimal impact on Middle Eastern oil supplies.
Stronger dollar, global economic concerns weigh
The dollar rose, weighing on oil prices, despite falling Treasury yields fell amid data pointing to weakness in the labor market as labor demand fell to a two-year low.
The signs of a weakening labor market in the U.S come ahead of nonfarm payrolls data, due this Friday.
Adding to global growth concerns, ratings agency Moody's (NYSE:MCO) cut its outlook on China's government credit ratings to negative from stable earlier Tuesday, in the latest sign of mounting global concern over a deepening property crisis in the world's second-largest economy.
Skepticism over OPEC’s voluntary cuts continue
Sentiment on oil prices continued to be soured concerns that the Organization of the Petroleum Exporting Countries and allies, including Russia, a group known as OPEC+, agreements on Nov. 30 to take 2.2 million barrels a day offline early next year may not be enough to curb a potential supply surplus.
Russia indicated the cuts agreed by the OPEC+ group will take time to kick in, with the market wary that Moscow may try to talk up the need for cuts while producing as much as possible to fund the ongoing war in Ukraine.
(Peter Nurse and Ambar Warrick contributed to this report.)
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